Okolikj, M., & Elkink, J. (2016) Comparing with Which Neighbours? A Test of Economic Benchmark Voting

Abstract: Economic voting theory is based on a very simple notion: “voters support the incumbent government if the economy is doing well, otherwise the vote is against” (Lewis-Beck and Paldam 2000). However, the evidence that voters reward and punish incumbent governments for economic performance is rather unstable or weak (Duch and Stevenson 2008; Anderson 2007; Van der Brug et al. 2007). Our line of inquiry studies the relevance of economic performance in other countries, the so-called “benchmark vote” (Kayser and Peress 2012). Voters do not directly evaluate their government’s performance, but how their government performs relative to other countries. We extend the empirical analysis of the benchmark vote using geographically weighted connection matrices, as well as measures of trade connectivity between countries. We argue that countries that are geographically proximate to each other or have intensive trading ties are likely to operate in a similar economic environment, and thus face similar constraints on economic policy. If voters see such similar countries performing badly, their expectations of their own government are also lower. Using a unique data set, our data includes 84 countries with 809 democratic elections since 1945 our empirical modeling strategy will include both the spatial (network) and temporal dependencies.